Versarien Plc (LON:VRS), the advanced engineering materials group, has announced its unaudited interim results for the six months ended 31 March 2024.
Financial Summary
● Group revenues of £2.50 million (2023: £2.62 million)
● Graphene revenues of £0.28 million (2023: £0.09 million)
● Grant income of £0.20 million (2023: £0.06 million)
● Adjusted LBITDA* of £0.79 million (2023: £2.01 million)
● Loss before tax of £1.77 million (2023: £3.40 million)
● Cash of £0.70 million as at 31 March 2024 (30 September 2023: £0.60 million)
*Adjusted LBITDA (Loss Before Interest, Tax, Depreciation and Amortisation) excludes Exceptional items and Share-based payment charges)
Operational Highlights
● Completed an agreement with MCK Tech (Korea) for the exclusive licence of five CVD patents
● Sold South Korean plant and equipment to MCK Tech (Korea) for £604,000
● Completed a know-how and manufacturing licence agreement with Montana Quimica LTDA, a Brazilian multinational focussed on the production of paints and wood finishing products
● Entered into a mutual letter of commitment to support Building for Humanity to provide 3D concrete printed materials for social housing in Accrington
Stephen Hodge, Chief Executive Officer of Versarien, commented:
“The re-focussing of the business to its core graphene technology combined with a manufacturing-light approach is beginning to bear fruit financially with losses continuing to fall. We have a number of parties showing initial interest in licensing our technology as well as progressing our strategic relationships in core areas particularly construction including 3D concrete printing. We remain optimistic about the future as we continue to streamline our operations, capitalise on our strategic partnerships and drive technological advancements.”
Chair’s Statement
It is only a short time since we updated the market with our Annual Report to 30 September 2023, published on 28 March 2024, but nonetheless I am pleased to report on further progress made.
The disposal of the two mature businesses remains an ongoing process. Talks are at an advanced stage with one party regarding the AAC plastics business, although there can be no certainty that this will lead to a successful sale.
The pipeline of opportunities continues to grow and supports our view of reaching EBITDAE positive during the second half of next year. Whilst the Group still remains loss making at present it has made significant progress on reducing its LBITDAE over the last 18 months from £2 million in the first half of the 2023 financial year, to £1 million in the second half of the same period and now to £0.8 million in the period under review.
I am grateful for the support we continue to receive from both new and existing shareholders and to all our staff as we continue to transition the business into an IP led licensing model and look forward to updating the market on future developments in due course.
Diane Savory OBE
Non-executive Chair
Chief Executive Officer’s Review
The first half of the financial year has marked a significant period of strategic refocus and operational efficiency for the Group. We have made considerable progress in enhancing our core technology businesses and aligning our business model towards a manufacturing-light approach. This shift is already reflected in our improved financial metrics and the birth of new strategic partnerships.
Graphene developments
Our strategic partnership with Montana Quimica LTDA (Brazil) with whom we have secured a know-how and manufacturing licence agreement reinforces our presence in South America. The sale of CVD graphene manufacturing equipment to MCK Tech (South Korea) aligns with our manufacturing-light strategy and provides working capital; the opportunity to remain operating in the area of CVD graphene in collaboration with MCK Tech is underpinned by our licencing agreements. We have further strengthened relationships in Korea through supporting the development of international standards for graphene and 2D materials, funded by the Korea Evaluation Institute of Industrial Technology (KEIT) until December 2028. KEIT is an organisation dedicated to establishing a programme of international joint research and development between research institutes of the Republic of Korea and overseas organisations.
3D construction printing developments
3D construction printing continues to gain traction. We have delivered the “Physical and Mechanical Properties of 3D Printed Concrete” report to the Office for Product Safety and Standards, part of the Department for Business and Trade and have recently signed a letter of mutual commitment to support the “Charter Street Accrington” social housing project led by Building for Humanity. This initiative represents the largest 3D housing construction project in the UK, exemplifying our commitment to innovation and sustainability. This project is a pivotal opportunity to showcase Versarien’s capabilities in enabling low-carbon, efficient construction solutions. The project is due to start during H2 2024.
Outlook
I extend my gratitude to our shareholders, partners, and dedicated team for their continued support as we navigate this phase of growth and innovation.
The re-focusing of our business towards our core technology businesses and strategic collaborations is bearing fruit. Our continued divestment from non-core activities will see a reduction in overall revenues, but the notable increase in graphene revenues and grant income, underscore our more focused approach. We are witnessing a reduction in losses and a growing interest in licensing opportunities that positions Versarien for sustained growth and industry leadership. We remain optimistic about the future as we continue to streamline our operations, capitalise on our strategic partnerships and drive technological advancements in the construction and leisure sectors.
Dr Stephen Hodge
Chief Executive Officer
Chief Financial Officer’s review
The results for the period continue to show reduced losses as we seek to transition the business into a financially viable operation. The Technology Businesses have seen an improvement in revenues to £277,000 from £87,000 in the comparative period. In addition, income from grants awarded to Gnanomat have resulted in an increase in other income from £54,000 to £202,000. Further information is given in note 2, segmental information.
The change in strategy to a much-simplified structure has resulted in a number of cost savings, including exiting part of the lease at Longhope following the adoption of the manufacturing-light strategy.
The mature businesses have seen a revenue decline, albeit that AAC is now seeing signs of some reversal. The disposal process for both Total Carbide and AAC Cyroma remains ongoing. AAC is more advanced and its assets and liabilities are now classified as “held for sale” and its results treated as a discontinued operation albeit there is no certainty of completion.
The adjusted LBITDA for operations is calculated as follows:
| Continuing operations | Discontinued operations | Total | Continuing operations | Discontinued operations | Total | |
| 6 months ended31 March 2024 | 6 months ended31 March2024 | 6 months ended31 March 2024 | 6 months ended31 March 2023 | 6 months ended31 March2023 | 6 months ended31 March 2023 | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
| (Loss) from operations | (1,373) | (148) | (1,521) | (3,033) | (97) | (3,130) |
| Depreciation and Amortisation | 324 | 35 | 359 | 594 | 89 | 683 |
| Share based payments | 147 | – | 147 | 264 | – | 264 |
| Exceptional items | 229 | – | 229 | 170 | – | 170 |
| Adjusted LBITDA | (673) | (113) | (786) | (2,005) | (8) | (2,013) |
Adjusted LBITDA (which is not a GAAP measure and is not intended as a substitute for GAAP measures and may not be the same as that used by other companies) is a measure used by management to reflect the core operating performance of the underlying businesses rather than the effects of non-core financial and non-cash expenses.
The reported loss before tax was £1.77 million (2023: £3.40 million). Group net assets at 31 March 2024 were £0.98 million (30 September 2023: £1.08 million) with cash at the period end of £0. 70 million (30 September 2023: £0.60 million).
Net cash used in operating activities was £0.77 million (2023: £1.83 million) and cash used in investing activities was £0.02 million (2023: £0.14 million), net principal lease payments were £0.24 million (2023: £0.35 million) and CBILS repayments £0.04 million (2023: £0.05 million), giving total cash outflows of £1.07 million (2023: £2.37 million). These outflows were financed by net funds received from the share issues of £1.39 million (2023: £2.02 million).
The surplus of £0.32 million (2023: £0.35 million deficit) together with reduced drawings on the invoice finance facilities of £0.22 million (2023: £0.24 million) resulted in a cash increase of £0.10 million (2023: £0.59 million decrease).
Going Concern
The interim statements have been prepared on a going concern basis as described in note 1, basis of preparation.
Chris Leigh
Chief Financial Officer
